tv Closing Bell CNBC April 16, 2019 3:00pm-5:00pm EDT
would -- as your answer would suggest. it is up very sharply. apple down very slightly here. we don't know any of the financial details here, but it's really the meaningfulness to qualcomm's future that this represents, right, gene? >> yeah. exactly. this is an i.p. company ultimately, and i think that, you know, it's hard to under state how apple and qualcomm the significance of their rift and the fact that they came to an agreement i think is a significant endorsement regarding qualcomm tech or the strength of that tech. great positive i would mention this, though, this is a win for qualcomm in the near term, it doesn't change apple's long-term trajectory they want to move away from qualcomm i would expect that in the next one to two years they're going to come up with their own chips and go away from qualcomm. >> gene munster, thank you for calling us appreciate it. >> thank you for watching "power lunch. >> "closing bell" right now.
it is the final hour of trade. we're about to get some big earnings from netflix and ibm. we'll tell you the key numbers to watch in each report. as the floodgates open for ipo market the banks, some are earning more than others and i have the news samsung galaxy fold in my hand i have the first peek. it folds is a nearly $2,000phone going to change the smartphone market? "closing bell" starts right now. ♪ >> you didn't break it -- >> i must tase it to you at the open welcome i'm wilfred alongside sara eisen the high of the day for the dow was 146 points currently high by 80 points as you can see. up about 0.3%. s&p a little behind. nasdaq a little ahead and
financials, we'll dive into the earnings citi getting a boost because it was investor day let's begin with david faber with us on post nine, breaking news on qualcomm and apple recap it for us first of all. >> what we've got today late in the day here is a settlement to a long-rung, nasty battle that has taken between the two largest companies in the country, apple and qualcomm. it's been going on for years it was culminating at this very moment in a san diego court with the judge hearing open arguments from both sides but the two have reached a settlement according to people familiar with the situation. that said settlement is expected to be revealed shortly as i understand it, and i would assume made clear to the judge as well who perhaps will then stop the testimony going on right now in his courtroom under the settlement, they will have reached a deal under which qualcomm will be paid for many
years to come, a new -- at a new level, which i'm not quite certain at this point exactly what it is, for its patents, for its chip sets with apple, as well there is a payment that is going from apple to qualcomm in part at least to make up for the many billions of dollars that it has not paid or technically speaking have not been paid by its contract manufacturers who stopped paying who had the also agreements to make the funds for apple and have licensing agreements with qualcomm it's a significant moment for shareholders of qualcomm who have been watching as the company has fought all not just apple, but governments around the world. our own ftc in a case by the way we still have yet to hear the judge's decision on that was held not that long ago, but most importantly, with apple, in jurisdictions around the world and i should add, by the way, that today's settlement, as i understand it, does end the
litigation between the parties in jurisdictions around the world. it is a so-called global settlement it ends all on ongoing litigation as well, with the manufacturers that qualcomm had to separately sue, and it does involve what is a global patent license agreement and a chip set agreement. we're awaiting some more details, but an important moment you can see qualcomm shares responding as you would expect very positively given the discount that's been applied and the fear that they would come out of this trial in a very weakened position if it didn't go their way. >> stay with us. jon fortt is here as well, covered this long-running battle between apple and qualcomm, jon, and can appreciate the significance of a settlement here just how much of an overhang was it >> you can see it in the stock price. i mean qualcomm is up about 12.5% right now. you can see apple's not moving that much. surprising to me, investors seemed to put all of the risk here on qualcomm granted it was qualcomm that
wasn't being paid for its ipo in this case. apple took a dramatic and unusual step of saying hey, while this dispute is going on, we're just not going to pay you at all we're to the going to allow the contract manufacturers that would give you the payments through us to pay you. that put qualcomm in a really tough spot, but i said it on cnbc several times and i'll say it again, qualcomm just really has a history of figuring its way out of these tight legal situations so you can't ever count them out you look at china, korea, various jurisdictions, various iterations of technology, they have faced this. it appears they have once again. of course we have to see the details. a lot of money, particularly on the margin side with this royalty business exactly what kind of a deal have they gotten out of this, but the testimony was not going to be entirely kind to apple in this case qualcomm very experienced in dealing with these legal
matters. neither company really needed this qualcomm is really in whole position when it comes to 5g technology that foldable phone you've got, everything that has 5g that is really slated to come out any time in the near future, it's got qualcomm technology in it. investors expect that from apple. apple expects that from apple eventually doesn't head to be in this head-to-head battle. >> we have the press release now and we can give you a few details. jon, to your point there aren't a lot in here other than we know the nature of the term of the new agreement between the companies. it is six years, a six-year license agreement, effective april 1st of 2019. already in effect. it does also include a two-year option to extend i believe that's at apple's -- whether they want to extend. a multiyear chip set supply agreement. so again, they have announced the dismissal of all litigation between the two companies worldwide and a six-year agreement for a new license agreement and as well a multiyear chip set supply
agreement that could go as long as eight years if apple decides it wants to. >> from your reporting any indication of why this settlement is being made today why did they let the court case begin in the first place if they were close to this agreement >> that's a great question you know, we've heard various things from the two sides and jon can attest to this, even whether they were talking or not. it got so heated in some ways that one side would say we are talking and the other side would say they're lying we're not talking. you have to talk to get to a settlement while they let it go exactly to this point this morning i'm not sure if that was technicalities or last-minute things they did try to request potentially that the trial would be delayed that didn't happen they started testimony and did actually have jury selection yesterday. it's a good question as to why they waited so long. not the first time something settled on the courtroom steps or so to speak. >> it seems like a high stakes game of legal chicken. like you want to see how much
the other side is going to give, are they really going to stick to that position right up to the pont when you go to court and you've got papers you're going to file. details are on the line. things have a way of coming together if there's going to be a deal that appears to be what happened here. >> we're really seeing a sharp reaction qualcomm shares up 16%s. might be helpful to sort of review how long this feud has been going on and how nasty it's gotten i feel like we've been covering this for years. >> since 2017. >> yeah. >> it has. and there have been other connected feuds to this. i mean you look at qualcomm faced a very similar issue in china with oem's not paying it for i.p. as well, went through got stmtsz there right after that the apple issue flared up. investors will have to figure out how to factor this in to concerns about in the qualcomm model overall. this is a company that believes, whether you believe it or not, it believes its ip is very valuable, it is aggressive about it and charges a high margin for it and the proof is in the
pudding as they say. generation after generation can they be in a leadership position, not just for 4g and lte, but also for 5g it appears that in that position now. if you think that they can continue to do that you look qualcomm if you think eventually somebody will mount a legal challenge that picks them off, you like it less. >> it's also important to point out there were things at risk here for apple, not being able to come to market with a 5g phone, potentially having to rely on other chip suppliers, namely intel, unclear what they were capable of doing in that, and having a generation of their competitors out there with 5g phones, samsung -- >> look at the intel reaction. >> and not necessarily be able to be there with that, jon this puts them in a better position, one would expect, to be able to meet the demands of their customers, such as verizon or at&t, and their customers who potentially were demanding a 5g
phone. >> even though we don't have the financial settlement amounts yet, the market is saying to this that apple is the one that has had to come to the table to settle with qualcomm, as opposed to the other way around. >> qualcomm had so much more at stake if they, in fact, lost at trial, they would not only have faced significant penalties that could have amounted to billions of dollars, but their entire model would have -- >> if they were to lose. >> qualcomm has been punished quite a bit. >> the stock hadn't been up at all this year. i think it's really a relief rally, yes, they are going to get billions potentially in return from apple, having signed a new six-year agreement, that's obviously going to be added to earnings, one would expect fairly quickly, but it's as much making up the lost ground as a result of the -- of what they conceivably could lose. >> what happens to the rulings that have already gone through i mean apple's already had some rulings against it, right, that limited some of the phones. >> in china and germany for a while. this settles -- this settles all litigation in all jurisdictions,
so all over and done with. now qualcomm itself had to settle in china years ago with south korea as well. they still have an ftc case but that now is -- people are not nearly as concerned given this has been settled there's an ftc case we haven't heard from the judge that concluded only a few weeks ago. >> if you're wondering about implications for intel i would say intel is still in the position as a preferred partner for apple. intel supplies a lot of chips to apple, not just in phones, especially in max, so that relationship you would expect will continue to be a strong one. also apple likes to have multiple options for suppliers, so you would think that they will continue to give business to intel it will be important to watch how that's allocated in the modem business in particular there were some questions about whether apple was picking the best modem for their phones when they were going with intel or if they were just picking what was strategically convenient now that this is settled we'll
see how they do. >> jon, given this is a six-year agreement a sign that this is more settling it for the medium term as opposed to for forever. >> six years is as close to forever as you get in this business with an option to renew. this is something that investors who were looking for a settlement could feel pretty good about. >> we've talked to -- you guys have interviewed mollencough, interviewed on our air tim cook about this, i mean i wonder how personal this is and how big of a peace agreement this really is >> i don't think it was as personal as it appeared. i was a little struck by how tim cook talked about it he talked about qualcomm as not being that important, and that to me, i didn't really buy that. qualcomm is an important company and does have important i.p. this is not as personal, though, as apple versus samsung was. they're just -- it felt like there was no way apple was going to settle that that was about a company copying
their design and i.p. as apple saw it anyway and they were just going to go to the wall for that i didn't understand really why apple versus qualcomm would be as contentious as it sounded and so in that sense i'm not surprised they settled. >> qualcomm has more than doubled its 30-day average volume of 12.1 million shares, traded over 27 million shares today as we said, it's up 15%. david? >> yeah. you know a little more detail to share with people here because i believe qualcomm has filed a couple of slides that are going to be helpful at least in terms of helping people understand the financial impact don't have a lot to share here, but apparently they are going to say and expect an incremental earnings per share of roughly $2 a share as product shipments ramp talking about the direct licensing agreement between the two, the royalties that apple will pay, the one-time payment from apple to qualcomm, the
multiyear chip set supply agreement will contribute, they say, to increased stability for the licensing business, and again, the number they're giving us at least at this point is incremental eps of roughly $2 again as product shipments ramp which i want to read a bit about when what that means or when they expect that to occur. >> does this free qualcomm up to tell its own story again remember, they had that big deal for nxp that didn't go through because of a trade dispute between the u.s. and china it appears that under current circumstances maybe white have gone through -- maybe it would have gone through, then this legal issue with apple, the biggest company in the world crop up, that was a overhang over their stock, now are investors willing to listen to a different, longer term, controlling their own destiny story from qualcomm. i don't know we'll see. the stock pop is a start. >> mention those earnings for qualcomm due on may 1st which would be after the market closed
live on the show the shares reacting as we said 15% higher for qualcomm. apple slightly higher on this news intel is still higher on the day but given up earlier gains essentially has traded lower off the back of this guys, thank you both very much david, i'm sure we'll have more throughout the show. still to come we'll hear from volkswagen ceo's about how terr tariff threats are impacting their business. >> would you pay nearly $2,000 for a folding samsung galaxy phone? a hands on do temofhe futuristic device next ♪ an ipo? 401(k)? where do i start? empower yourself with the free tools and resources on investor.gov. before you invest, investor.gov.
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♪ welcome back foldable phones were the talk of town at this year's mobile world conference but nearly $2,000 is the samsung galaxy fold worth it digital editor todd hazelton joins us on set with a firsthand look at the device there he has got it. is that your dog as well >> that's maybe. mable. >> my first question when we saw this launch was, how robust is it and how well does the fold
work we were playing with it. it is impressive. >> worked really well. you can see it which is kind of weird, but it's a first generation product i will give them slack on it but it works well and samsung told me, this is kind of crazy, five years, ten times a day, is about how long it lasts in its tests. most people, that won't last me very long. especially at $2,000, you probably want a -- >> just breaks then? >> well, that's what they're guaranteeing i don't know if it breaks, but it's not built to withstand too many. >> can you use it when it's not unfolded >> you can use it. this is the regular screen full android experience on the outside and open it up and get a tablet experience. the reason samsung is doing this, i believe, is that smartphone sales have plateaued. idc said last year worst year for smartphone sales since 14u apple iphones plateauing what are they doing to make phones exciting again? cameras that are great, screens
that are great, saying hey, let's take a phone and make it a tablet and get two in one. this is a little bulky, but i think it's where we going before we get to glasses or something like that. >> you mentioned the fold you can see. it's not really there, therefore, to watch a full movie, but it -- >> it actually works -- >> reading and writing much easier. >> it works well with movies because it's okay when it's really dark or bright with the screen so you don't see it as much it's at these weird angles and when touching it, swipe around a web page, you feel the fold. kind of wish it wasn't there it's a first generation product. >> samsung came first to the market who else is working on a foldable phone >> huawei is the one that looks more appealing. this folds open. huawei has one on the outside that folds like this where it becomes the full screen and makes a little more sense for the euruser because a screen ths more traditional what you're used to, this window which i don't think -- >> toss it down here don't know if -- it's not that
much bigger. this is the smaller phone sx i think it's called. not that much bigger when folded >> it's about twice the thickness of the iphone. >> it's thicker. but that's annoying in a pocket. >> it's not that it's annoying at all it's a little heavy. you a factor that doesn't feel right. samsung says they kept the screen small to use it with one hand an on the inside it's a big experience which is nice to use like a tablet but not something you want to walk around town with. >> right. >> what is that? >> or it's a bug. >> is apple working on one moo we don't know. apple sources it screens from samsung would not surprise me to see something like this once the technology gets perfected. this is a proof of concept you can buy for $2,000. >> is this appealing to someone who has an iphone and ipad to only need this in the future. >> most people should stick to an iphone and ipad
a regular ipda you can buy about six of them for about the price of that. >> wow. >> you're not like super promising on it. >> i think -- >> revitalize the smartphone category fancy cameras aren't doing the trick anymore. >> that's the goal here, to show hey, you can do other things with smartphones and they can be exciting again, but i don't know if it's going to work. they have to bring down the price and get rid of the fold and show people what you can do with it besides having this clunky factor right now. >> i think this is an easier size to hold. >> it reminds me of the phones in the late '90s like the nokia's which were high-end phones >> i like it we'll see if it works. i want apple to do it so we don't have to switch operating systems. >> thank you for bringing it >> we'll have you back. >> really? >> it's todd's under 40 minutes here to go before the closing bell. the major averages we're still higher across the board. dow right now is up about 79 points
s&p 500 it's up 0.1% it was up stronger around the open technology is having a good day. some earnings being well received health care although unh lost some of its game bank of america a warm reception. >> it traded down and it's back to flat. citi boosted the financials this afternoon which we'll talk about. we've had a lot of tech is so far in the show. more to come massive set of earnings including netflix and ibm. also, csx and united continental. we'll have thoseheth ce t. wn eyom
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♪ 35 minutes left to trade the dow up 0.3% or 77 points the high of the session was up 146, about half of that at the moment s&p's just higher. nasdaq up 0.35%. qualcomm nicely higher by about 15%. still ahead, at&t selling its hulu stake for nearly $1.5 billion. was it the right move at the right time former ceo bob wright will join us to weigh in. >> take a look at qualcomm and apple, moving on news they have settled their royalty dispute and dropped all litigation we'll continue to monitor those moves. sharp reaction higher. qualcomm soaring up 17%, hinavg its best day in years. "closing bell" will be right back
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welcome back time for a cnbc news update with sue herera. >> hello, wilf, everyone here's what's happening. in a televised address to the nation, french president emmanuel macron says he wants to see the fire ravaged notre dame cathedral rebuilt within five years. he promised the rebuilt cathedral will be even more beautiful. in dublin, house speaker nancy pelosi making it clear to
irish and british leaders a quick trade deal between the u.s. and britain will not happen if there are any changes in the peace accord between britain and ireland. that accord ended the fighting between british supported protestants and catholics in northern ireland. >> that's just not in the cards. if there's any harm done to the accords. don't even think about that. back here at home, mondelez is voluntarily recalling certain chewy clips ahoy 13 ounce cookies. the company says they could potentially contain an unexpected solidified ingredient they were sold nationwide and they are best when used by the daftsz september 7th, 8th, 14th, and 15th of 2019 so check those dates on the back of the carton. that is the news update at this hour i will send it downtown to you >> what's an unidentified
solidified material? >> i almost stumbled on that in my head i was thinking ew >> yeah. >> not sure what that is. >> voluntary. >> that's right. >> can't be that bad thanks. >> you got it. shares of united health moving lower throughout the session following earnings this morning and some commentary on the conference call, bertha coombs has been monitoring that story and joins us with the details. >> it was, sara. united health's first quarter top and bottom results topped expectations on strong fundamentals and the nation's largest health insurer raised the outlook. shares fell from a premarket gain to a new low during the conference call. ceo david whitman slammed democratic medicare for all proposals that would eliminate private health insurance >> the wholesale disruption of american health care being discussed in some of these proposals would surely jeopardize the relationship people have with their doctors and destabilize the health system and the cost burden would have a severe impact on the
economy and jobs >> witchman speaking out after medicare for all spooked investors in recent weeks after bernie sanders called out united for greed in a tweet last week analysts note that near term the real risk is the trump proposal to ban medicare drug price rebates. not withstanding united down about 10 humana and cigna hitting new lows the managed care sector is in bear market. >> does this mean that politics will trump the funds for a group that is really lagged behind the whole market all year long >> it is for right now there's so much uncertainty when you talk about switching out the whole issue on rebates, that could cause particularly medicare plans to have to raise their premiums which would mean people might start to switch around plans next year they still don't know what final
rules are and they have to submit their bids for the medicaid plans in june lot of uncertainty there. >> thank you joining us to discuss how this earnings season is going so far broadly, nick is here from data track research. it's early, but we wanted to sort of take the temperature on what were getting so far in terms of corporate results >> it's been going very well but largely because expectations were so low coming into earnings season analysts began the year thinking a 3% growth first quarter. they ended up thinking it's down 4% and that's where we are right now the numbers really came in, just easier to beat. >> about what the headlines on revenues >> headlines on revenue are up it's been margin compression that has really put the spook into the earnings season, more worries what's going on below the top line and that's what's pulled the numbers down. >> higher costs? >> exactly labor costs, a dollar year over year up 4 to 5%. that's been a pressure for international companies. labor and materials. >> i guess always key as well is
what people are guiding for later in the year. what have we heard so far? the banks obviously have kicked things off. >> the banks have been kind of mixed. jpmorgan an example of a real upside positive message. the way i think about this earnings season, it's tell me about the back half of the season we're looking for confidence from management that even if first quarter is kind of sloppy, which it will be, the back half of the year is 3 to 5% growth which what is the analysts are looking for now. >> which sector is best positioned or cheapest heading into earnings. >> financials are perennial cheap but very tough to play that group so late in the cycle. health care you mentioned hasn't performed, but we don't like that group much either technology is the place where you have to look because of its importance to the market and because you have a wide disparity of expectations between an apple and amazon. >> on that point, apple you think is set up well to beat earnings. >> it is the numbers have come down through the quarter, people are looking down 14% earnings growth for the company, down 6%
revenues that seems like a low bar to beat amazon, analysts have been raising numbers looking for 44% earnings growth year over year that's the kind of disparity you get in tech. >> do you think there's been an overreaction to the global growth slow down china concerns dominated at the end of last year when the numbers started coming down or have we not seen some of the big industrials come down yet. >> the first was q4 was so bad the market was bad, results slowed down, growth went from 25% to 10% year over year and then the worries over the slow down not just in china but europe it's been a confluence of those events that have driven down gdp and earnings expectations. >> how is netflix set up ahead of tonight >> that is a tough call where the numbers don't seem to matter as much as what the viewership is like and the subs are like. >> there we go either way we'll get the numbers later today after the close. nick, as always, thank you. >> thank you. still ahead on "closing bell," slowing global growth a
sign of a recession or a new normal >> netflix getting an upgrade at deutsche bank. will wall street be bullish after the results? we will count you down to the earnings and numbers to watch at the top of the hour. "closing bell" will be right back that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. back nasdaq. rewrite tomorrow.
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welcome back here's a look at qualcomm and apple moving on news they have have settled their royalty dispute and dropped litigation david faber reporting it just before the top of the hour check out qualcomm now session highs it keeps surging and shot up 13, 14% initially, now up 21%. clearly this has been an overhang on this company wall street seeing this one as the most to gain here from that peace deal reached with apple. apple up 0.1%. the intraday chart couldn't be more dramatic on qualcomm. >> jim cramer as well, when only up 15% tweeted qualcomm should be up way more than this it's huge. it's continued up 21%. see if that continues. we'll keep our eyes on that with 20 minutes left in the session the broader market, the dow just slipping, all the markets are slipping in the last 15 minutes or so. the s&p is now negative. the dow only up 40 points.
joining our "closing bell" exchan exchange steven parker at jpmorgan private bank, rick santelli in chicago. steven, something we heard from larry fink saying we're more likely to see a melt up than a meltdown one of the main factor was cash levels for clients still high. >> we're definitely seeing defensive positioning across both our clients and the investment industry more broadly. despite the fact that markets are making new highs you're seeing money flow out of stocks into bonds and what people are buying is more defensive we keep an eye on etf flows and this year we've seen $5 billion go into defensive sectors and about $15 billion come out of the cyclical parts of the market it's different from the exuberance than last year. >> the best performing sectors are technology, consumer and industrials. not so defensive.
>> one part is the corporate buyers there's a big buyback bid and i think those sectors are beneficiaries of that. i think on the margin you're starting to see people come back in there there is potential for the overshoot that larry fink talked about. investors haven't been buying there. if they begin to chase that gets us the potential overshoot. >> it would be good for larry fink's business. >> it would. >> as an asset manager, should be said. >> it was interesting to hear him as the ceo say so loudly melt up. that's like encouraging his clients topour into equities i would suggest. rick, want to come to the currency markets with you and whether we're talking japan, sara's interview yesterday with kuroda, it's all a question of how much more are they going to ease, where it feels like the fed has already done its positive not have why is the dollar so stubborn about not staying above 97 >> actually, it's back up just a bit. it's right there now, wilf i think in the grand scheme of
things i would flip the question around i think it's going to be hard to get the euro currency under 112, and my guess is that once we start to move through that level, you'll see a much bigger surge above 97 in the dollar index, but a lot has to go into that i know mario draghi, and mr. kuroda have issues should they need to push more stimulus through, i just can't even imagine the fate of their financial institutions, their banks. it's not going to be pretty. we're not quite there yet. as a matter of fact, one could argue that the only news about what you were just discussing about the melt up it came now. if you talk about a pitcher in the bottom of the eighth with a no hitter that's different than saying i think he's going to get it than calling it for it in the second inning. interest rates are moving along, the dollar index is for the most part firm, even though it's not aggressive i just no matter which way i try to analyze the way the markets are linking up it seems as though we're about to see
something big to the upside. we need one exogenous factor that is the catalyst and i still contend it's most likely trade >> well, looks like s&p has dipped into negative territory, steven what's the next catalyst >> the clear thing people are going to be watching are first quarter earnings reports while i think that the q1 results are important, people are going to be much more focused on the back half of the year specifically, the thing we're most watching is what's going on with margins because interestingly, while revenues are expected to be positive this quarter, earnings are supposed to be down if that trend continues because of higher wage pressures, higher commodity prices it's going to be hard to get to that close to double-digit growth we're expecting in the fourth quarter. if companies come out and say we're feeling better about the world now that markets have recovered and start spending again, maybe the margin pressures aren't so bad that could get investors excited about the prospects for growth in the second half of the year. >> even the declines doesn't mean stock prices fall. >> it's interesting.
if you go back to 1930, there have been 30 calendar years where s&p earnings have actually declined and in 23 of those years the market has been up >> so if you buy this idea that being put out there that people defensive as you said you've seen in the flows and money on the sidelines that could come and lift the market, where do you want to be do you want to be in the cyclical groups that have worked >> i think there's -- we're looking at a bar bell between the cyclical laggards, we like energy, and then also bar belling that with some of the secular growth stories i think technology, i think health care which is getting more interesting by the day given some of the pressure there. specifically with tech we lost software as labor markets tighten companies look to increase productivity and software is how they're going to do it. >> in terms of the sectors you would avoid. >> the things we're cautious about are the defenses they offer less potential earnings growth, still expensive and as bond yields drift higher the relative value trade between dividend stocks with high yields
and bonds doesn't look quite as attractive >> so rick, i mean what do you see as the next big data point to watch the numbers are still comes in kind of mixed? today's industrial production number wasn't so hot >> yeah. it wasn't. industrial production capacity miss there were expectation misses. they weren't really big misses i would continue to say that after some spotty, not many, but, you know, spotty jobs numbers and the notion of ppi being a bit hotter than we expected, that nobody should bury inflation or wage pressures or make any assumptions about ongoing productivity i will still say the easiest number to kind of handicap all of this, and you can call it laggard if you want, would be employment reports outside of any exogenous news i know there was negotiating going on with japan. larry talked about i can't stress enough. we talk about it every day and maybe the audience gets bored with it, but how trade just touches every aspect and so many aspects that will have
multiplier effects and the markets are acting well without them and i don't think people think about that long and hard enough. >> what do you think about international equities what is your preference? >> our favorite part of the market outside of the u.s. is in emerging markets if you look back to last year as the perfect storm, china was actually pulling back on stimulus, you had a stronger dollar and an aggressive fed and trade tensions all of those trend are beginning to reverse and the china stimulus towards the end of last year is just now starting to feed through to the economic data we're starting to see better trends there, positive surprises and think that feeds into the earnings growth story and you're getting discounted valuations. >> what about what rick said, the fact that a trade deal would touch so many sectors in parts of the market and could act as a catalyst to push stocks higher how much has been factored in already. >> i think there's still upside from a trade deal. i think some of that has been reflected. but when you look, for example,
at some of the asian technology companies that sell into the u.s., they haven't recovered nearly what they lost at the beginning of last year which tells you a trade deal still could give you more of that upside in parts of em. >> european equities you want to avoid. >> i think for a tactical short-term contrarian trade that is clearly the most unloved parts of the market. europe is the biggest beneficiary, aside from asia directly, of the china stimulus, so if we actually see that reversal in growth driven by china, i think europe could give you a tactical opportunity we probably rent that rather than own it. >> steven parker, thank you. rick santelli, thanks to you as well. news coming from the auto dealer show in new york. let's get straight to phil lebeau who is with volkswagen's ceo, phil? >> thank you very much scott who runs volkswagen usa, thank you for taking a few minutes to talk with us. we're going to talk a little bit about what volkswagen is right now. you know a lot of investors right now, they are worried
especially with the european automakers, the potential of a tariff on imported vooex, even though you build most of what you sell in the u.s., you build in north america, how much would it hurt volkswagen >> look, i think you said it first and foremost, boy this is an awful lot of speculation. you and i have been in the speculation game for years we think it's bad for business, american dealers, bad for american customers and raise pricing. i think we're hedged 96% of our products are made in this market. all this uneasiness and tension is not necessary. >> are you confident from talking to your colleagues in germany and europe that this will not happen? what's your outlook? >> i can't speculate again, phil who knows what's going to happen, honestly we're braced we have a plan we will execute accordingly. >> the other issue that people are worried about is, if the mexico/u.s. border is shut down, there's so much cross traffic there in auto production you have plants in mexico and the u.s. for the industry, if the border is shut down, let's say for a day or two, how much damage
would that do to this industry >> you're all hitting at the exact same things. business wants stability, transparency, business wants peace of mind. all of these things cause instability, lack of transparency, not a peace of mind these things are not good for business. >> but it would shut down assembly lines if the border were to be shut down not just for you but all auto makers. >> what does that mean we ship a lot of our products and they come out of the port of vera cruz. does that mean taes going to have an impact on shipping what we want is keep the flow of commerce, between two countries and that's what we feel should continue to happen. >> quickly, how do you feel about the market right now where volkswagen is positioned >> i feel better after march march was pretty good. april is looking okay. >> what's changed? >> springtime. americans get optimistic. >> that's it they get optimistic when they go to the dealership. >> march is about 20% bigger than february so it is the month you want to keep an eye on in general i think we need to be cautious as i've told you the market's
plateaued and i don't see big growth coming. smart with inventory and supply. i like the fact that we have new products in the market and we had a good march. >> scott the man who runs volkswagen usa joining us in new york city. back to you. >> all right nice sideline interview. phil lebeau, thank you very much netflix and ibm gearing up to report earnings after the bell up next we will break out the key things to watch in each report we'll be right back.
a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. we are just moments away from big earnings after the bell let's break out in some key metrics to watch julia, first to you on netflix >> well, sara, the most important thing to watch for netflix is its subscriber number 8.9 million is the number for netflix to beat, its own guidance for how many paying subscribers it would add this quarter. the majority 7.3 million are expected to come from overseas subscriber growth is key because topping those projection will show netflix's investment in original content is paying off and that subscribers don't mind
the price inskreesz announced in january. falling short of that number would point to vulnerability to the coming launch of disney plus and other services we'll be watching to see what guidance ceo reed hastings gives for subscriber growth in the second quarter and any plans to ramp up spending on content. now most analysts are bullish on the stock despite its 34% growth this year. guys, back over to you >> julia, thanks very much for that turn to ibm, deirdre hey. >> hey, wilf investigators will be looking for specifics on ibm's red hot deal on the back of the acquisition and some divestments. ibm shares had been outperforming the s&p and the xlk, the tech etf. the overall narrative hasn't changed a lot over the last few quarters or years. investors are still looking for progress for ibm on shifting business toward the higher margin next generation technologies like cloud and ai to offset its legacy businesses. the street is expecting ibm to report its third straight
quarter of shrinking revenue as continues to struggle to make that shift keep in mind its reporting structure is changing and retired the strategic groupings which was really useful in seeing progress in the next gen businesses and how much of total revenue it made up tony calls the restatement messy and complicated but we'll do the hard work and dig through it for you as soon as we get the results. >> tnkve mh. whas ryuc weill be back with the close five minutes left until the end of the day ♪
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welcome back just over two minutes left of trade. s&p flat as we approach the close. it was low moments ago but climbed back to being flat the dow up 0.2%. 56 points or so. nasdaq just slightly ahead of those. sectors financials up 1.3%, real estate, health care, at the bottom, unc disappointing with its numbers down 4%. some of the banks outperforming, citi the best, had an investor day today, reaffirming guidance for a couple years out bank of america, that's flat to slightly lower as we approach the close. its numbers weren't that impressive apple and qualcomm big movingers. apple is flat. qualcomm the beneficiary of this deal we don't know all the terms, but they were much more to lose, so getting a deal of any sort is good for them up 22%
intel has traded off its intraday highs but back high on the day. oil price higher, energy is higher bob? >> qualcomm, they were not getting paid by apple so that's an amazing move, 22% nice, mild up day, and then 3:30, boom, we hit a little blip there. take a look at s&p 500 an old-fashioned sell program. i saw no headlines, fang names, all got hit in the middle of the day. somebody was selling stock, put up amazon, you see a dip in amazon, but we had a dip in netflix. heard julia talking about the earnings there not clear whatthey're going to be talking about the dip in all of these big names. no clear reason for that i did not like the action at all today in health care 52-week lows 1% from historic highs on the s&p. 52-week lows in united health, humana and cigna on the medicare for all which nobody believes is going to happen but suddenly the
street seems to think is very real it's a mystery. >> good intraday action on the banks. bank of america down as much as 2.5%, ends flat and also a little bit of momentum for the other banks in the day so net, earnings season returns have been already for the banks. there goes the bell. s&p just higher by 5 basis points the dow up 1%. that does it for first half of the "closing bell. back to you. welcome to "closing bell." i'm sara eisen wilfred rejoining me in a moment along with mike santoli. he's back. finishing up the day on wall street, here is a look at the market the dow, closing up by a quarter of 1 percentage point, 68 points certainly off the highs which just came toward the opening bell earlier in the morning. dow did better than the rest, the s&p which ended flat as bob mentioned earlier.
we dipped into negative territory ahead of the close lost most of the gains throughout the day the asdaq, technology was a bright spot. financials the best performing sectors on the day nasdaq up a third of 1%. looked like we were on a track to climb toward a record high but softness toward the later part of the afternoon. russell 2,000 ends up more than 0.2% earnings watch right now julia boorstin, standing by for netflix results. deirdre bosa watching for ibm numbers. frank holland waiting for results from railroad csx and phil lebeau monitoring united continental. we'll bring you the numbers as soon as they hit and instant analysis joining us to talk about the market, peter, global chief market strategist and head of strategy at cantor fitzgerald. jon fortt is here to break down the tech earnings. and mike santoli with us as always what happened is this looked like it was going to be -- we were on record high watch this morning. >> i would say the market was flatish all day and closed almost exactly flat.
certainly a slight upside bias but because the market has been inching and oozing towards the old record highs i guess when all else fails and no other outside influence earnings season always have the offsetting currents and that's the case today you lost the leadership of some of the real growth stock favorites. software was soft today. the yield plays, right utilities as well as real estate were lower because treasury yields are picking up. is it a tired market it feels that way as we're kind of inching and getting stretched to the upside, but otherwise, not -- nothing that's telling me the trend changes here, but it's maybe a little tougher to get every next few basis points. >> mike, a good intraday pick-up in the bank stocks. >> there was it's part of the rotational market the overall market is not going to fall apart. we don't see the makings of that at least not just yet and when one thing falls, some other sector takes up the slack. even though bank of america, the one that reported this morning, was not really leading the upside. >> certainly wasn't.
it was down 2.5% at one point. i guess up since bank earnings started reported what's your take of the slow grind higher without huge momentum behind it >> my stance shifted bearish around 2800. i felt the market was pretty much fully valued at 2800 for an earnings season that wasn't going to be robust our expectation that fed was not going to cut this year frankly that the uptick in some of the chinese data was really a one-time wonder, rather than a new trend. man, i'm still feeling -- >> the move to 2900. >> we're 100 points north of where i started to become cautious albeit i think the market will be range bound bullish at 2400, seller at 2800. i just don't think the narrative has changed enough for me to change my stance. >> all right as we await those netflix numbers which we'll bring you as soon as we can, mike, key
question on earnings is how is the fang sector set up >> yeah. the fang sector, most of them are -- >> we have those netflix numbers. apologies. go for it, julia >> yeah. wilf looking through netflix earnings here. the stock dropping apparently on lower than expected guidance the company's additions of subscribers stronger than expected adding 9.6 million paid net additions in the quarter worldwide. better than 8.9 million that the company hat forecasted and analysts expected. the company's revenues beating estimates by a hair. adjusted the company's diluted eps of 76 cents not necessarily comparable because there's a one-time charge. the reason why the stock is down over 4% seems to be on guidance for this second quarter. the company says it projects it will add just 5 million new subscribers in the second quarter. looking at system analysts had been expecting that the company
would add 4.8 million just overseas and another 560,000 domestically we're talking about projections of in addition of 5.5 million subscribers in q2 the company is looking for just 5 million and the company's guidance for earnings for the second quarter also lighter than expected we're seeing some headlines ain about currency headwinds the company pointing out in the first opening comment here average revenue per user decreased 2% due to the currency headwinds. excluding the average revenue per user improved 3% a couple different issues at play here and we will continue to dig through this report and get back to you with more. >> yeah. including some of the color that's buried in there on competition, which they do actually mention apple and disney unveiling their direct to consumer subscription services we'll get back to you. initial take on the numbers? >> yeah. obviously the market -- the stock had ris an little bit in advance but was below its highs.
it was going sideways for a while. i think that guidance is where there's going to be sensitivity because they're having to deal with having the price increasing flow through and mature a little bit in the portfolio it's always been a question of how much the international growth is going to, you know, have that momentum to it when you do talk about pricing and competition. i get why it moved this way. netflix moving, you know, 5% afterhours on its earnings day is not a -- i will have to say. >> jon fortt is here with us as well jon, the u.s. adds and the international adds both slightly' head for the past quarter but the guidance a little soft going forward, more on the u.s. side which is a key focus of the pricing >> you have to have fears of the future here if you're going to fear anything when it comes to netflix, the shadow of the mouse. disney hadn't moved for a long time in over the past couple days it has been up big on the promise of streaming, entering into the ring with netflix to kind of have netflix a little
cautious on guidance after that, could be spooking people as sara as you say -- >> as they say we don't anticipate the new entrants will affect our growth because the transition from linear to on demand entertainment is so massive and because of the differing nature of our content offering they spelled it out they're not afraid. >> that's what they would say, right. i would say at the same time, netflix is a stock that moves after earnings one way or the other. you can't necessarily take that as a gauge of where it's going to go. but i certainly think that's part of the context here you've got especially disney but also apple coming. >> we've got numbers from ibm. deirdre has them for us. deirdre? >> wilf, a miss on the top line but beating on the bottom. the stock is taking a hit, down as much as 4% in the afterhours. stock revenue up $18.2 billion versus $18.5 billion expected. keep in mind this is ibm's third straight quarter of shrinking sales year over year adjusted epps coming in two cents higher than the street was
expecting $2.25. ibm has organized its revenue segments it has retired its strategic imperatives grouping which i mentioned. the closest thing to that would be cloud and cognitive software unit and we saw a big beat here, $5 billion versus the $4.1 billion forecast gross margins i want to point this out, falling short, 44.2%, versus 44.7% expected. epps guidance unchanged at least 13.90 versus 13.91 estimated on the call, investors want to know more about how it plans to integrate red hat this is one of the biggest technology acquisitions ever for $34 billion. ibm pairing its losses a little bit in the afterhours. guys >> deirdre, thanks very much for that down about 3%. mike, disappointment here get reacted to more pronounced ways. >> stock up 37% off lows, giving back about two weeks worth of
that in this immediate afterhours move. i think, you know, any time you constantly have to worry about currency headwinds taking them from a revenue gain to a loss, it's a similar story with ibm. i don't think it changes, you know, the broad path of where the company is meant to be headed it's a matter of it's kind of feels like a familiar quarter for ibm after, in fact, its rallied since the red hat deal and year to date. >> it is it's been a while since we've seen ibm as one of the top two best performers on the dow but that's where it sits this year what do these numbers tell you about some of the optimism on the fundamental story? >> i don't know that it tells you that much about the optimism positives and negatives here the problem the top line and bottom line, you've got eps ahead of estimates, revenue a bit light. services signings are a bit on the low side let's see. i'm seeing, yeah, they are down but strong in q4 services are known to be lumpy
you have the strategic imperatives they're not reporting that out anymore they're focused on cloud cloud is up in the low teens which is pretty nice but you want to see consistency from ibm. ibm has a way over the years of kind of changing the story it feels like from the investor perspective for the numbers that are going to be the best while let's see over the course of the year how that cloud number trends can they really play with microsoft, with amazon will their deals that they do up in that big tier really deliver? that's what we want to see, i think, if you're going to fill out as ibm that story of momentum in the cloud. >> that stock down nearly 3% csx numbers crossing and frank has them for us. >> good afternoon, wilf. shares of csx up about 4% after the company reported revenues in line with expectations and a beat on profit epps coming in 11% more than what the street expected an improvement in operating
ratio, the three major business segments, merchandise, the transport of chemicals, auto parts and food, in line with what the street expected 6% growth there coal business doing better than expected 7% growth the street expected 5.8% its intermodal business, moving freight from highway to rail did worse than what the street expected, 5% decrease in this quarter. there was some concerns that winter weather might impact margins after seeing jb hunt's performance yesterday. however, we're seeing right now again, operating ratio improving and revenues and profits -- revenues in line with expectations, profits 11 cents better than what the street expected back over to you. >> it's getting a nice reaction. frank, nice, thanks, up 4% saw sales growth, merchandise volume growth and broad-based price gains. that's a good sign for the economy. >> i was going to say of the ones that have roorptsds this is the good read on macro a positive one union pacific indicated a little higher so people thinking it's been a strong group within
transport, the rails i guess an encouraging story not a different story than what we were meant to understand already based on how the stock has performed. >> back to netflix for a while i mean, jon, what are you going to be listening for this company beyond the competition they're trying to spell out in the press release around disney plus and the stock hit that netflix has taken? >> i think international momentum will be an important one to listen for here i mean a few quarters ago, that was almost the whole story, is people believed that hey, domestic growth wasn't really going to be there. it was all about international and then netflix turned in some pretty strong domestic numbers i think now with this guide that's about 10% light on the sub number overall of what people were looking for you want to hear, are they confident in their slate internationally, seeing any problem geographies in particular, and then once again even though they're saying they're not worried about competition there will be people who want to hear what they have to say about competition. >> stock is coming back.
>> as julia was mentioning today, reed has never scheid away about talking about competition. >> back to julia who has been digging through the release. >> wilf want to give insight here into the impapgts of the price increases netflix announced. the company says the response in the u.s. to these price increases in the u.s., brazil, and europe is as expected and tracking to what they saw in canada saying growth editions were unaffected they are seeing modest churn effect as members consent to the price changes and going on to talk about the strong global content coming the second half of the year. the fact that these price increases weren't just absorbed is worth noticing here and perhaps that's one reason why they're guiding to lighter than expected subscriber additions in the second quarter also want to give more insight into competition here reed hazings calling out apple and disney saying both are world-class consumer brands and kriktsed to compete and he says we don't anticipate the new
entrant wills affect our growth because the transition from linear to on demand is massive and the differing nature of our content nate they will continue to grow as they invest in content and improve the service and consumers migrate from linear viewing there are a number of winners in the streaming space and the losers will be the traditional tv market. another key note, netflix announcing its cmo kelly bennett will be retiring after seven years at this company. a big departure there and a big role to fill for the company as they face new competitors. back to you. >> netflix coming off the lows there. julia, thank you down now only 1% it dropped i think 4 when the first reaction how about that commentary on churning from the price increases, now we're focused on the price of these services because disney laid out its and it was considered a good deal. >> yeah. but i think there was some expectation that netflix wanted to get this price increase out
before all the rest of the competitors came to market while they're still not the only game in town, but certainly the dominant game in town. i mean they might remain that. if they were going to do a price increase better now than when you have disney out to market with a cheaper service i'm not sure people expected there to be zero impact from that, so overall not sure that that's a concern but still, you know, even though reed hastings is going to say it's a big market and we have a lot of share to take from cable, i think people will look and compare the price of apple or disney versus netflix and that conversation is at least going to happen. you can tell people are thinking about price a little bit. >> i mean the question around netflix for anybody who owns it, there's a number of subs globally that they feel like we get to that point and the model works and scale is to their advantage, maybe 250 million global subs, whatever the number, and the question is the pace to get there if you think they're going to get there ultimately that's where the competition question comes in. i totally agree in the value of
netflix's head start in all this one thing that did occur with the disney announcement s, netflix actually probably thinks it knows the value of legacy disney content in terms of stickiness of subs because they had it for a long time and they believed they have all these insights based on that data. maybe they know better than disney, you know, what the penetration rates are likely to be based on that content. >> as we talk about netflix and ibm, i know you can't focus on individual stocks, but how do you think the balance in your head about the fang names and older value tech names. >> i think the fangs are really important, especially at this part of the market cycle if i'm correct we're late cycle which i still believe we are the reaction of a netflix, a company that has $3 billion in cash, whether or not it beats on subs or not to me is important yes, jon's right it can be volatile and doesn't necessarily tell you much the next day when it's down 4% or not. the move of the fangs in terms
of market sentiment is important because they are richly valued in my view, and if the market is going roll over it's likely going to be led by the fangs >> we've got united continental earnings phil lebeau tracking the numbers. phil >> sara, the earnings are better than expected for nighted for the first -- for united for the first quarter. earning 1.15 a share the estimate on the street 95 cents a share. 20 cents better. revenue is a little shy of expectations coming in at 9.589 billion, shy of 9.6 billion. couple key metrics people will be focused on when you look at the first quarter for united, revenue for available seat mile, the key metric investors focus on, up 1.1%. keep in mind you had a number of factors in the first quarter the polar vortex which canceled a slew of flights not only for united but other airlines, the government shutdown hurt the
company. the pakistani air space shut down impacting flights for united into india. cost for available seat mile down 1. %. couple key things i want to focus on in terms of united's guidance reiterating full year earnings guidance between 10 and $12 a share and also its revenue per available seat mile is going to be flat to up 2% in the second quarter. the -- that was the guidance the expectation on the street before, united saying it's going to be better than that it's expected to be up a half a percent to up 2.5% finally in terms of what the company is looking for in capacity for the full year because of the 737 max issues and because of a couple other issues, they're bringing back their capacity expectation in the range of growing 4 to 5%, previously they expected it to grow 4 to 6% you see shares of united up a little over 2%, guys, on better than expected earnings don't forget conference call is tomorrow morning lot of expectation that oscar
munoz will talk about the 737 max and where united is positioning itself for the rest of the year. guys, back to you. >> phil, thanks very much for that mike, i mean, a tough set of factors in q1 to navigate. still decent beat. >> seems decent. the stock with this little pop gets back to where it was in tebry. more in recovery mode. reiterating guidance is good in this context 10 to $12 a share is a wide range. it's just i think there's a lot of play in there >> how do you think about the transport sector in. >> it's important as just are the fangs. less so now perhaps than 10 to 15 years ago the transports have been underperforming. the financials had been underperforming until the last few days which i think is interesting. i think if the rest of the market is going to rally broadly we need participation from the fangs, transport and financials. those are the three sectors i
look at closely to see if we get the broad based participation that we need for a rally in the s&p. >> peter, thank for joining us great to see you jon fortt will stick around for us longer and we'll dive more into netflix after the break >> also up next, breaking down the numbers, netflix shares off their lows after posting quarterly results. we'll dig into that report straight ahead. meckft is of ibm, a bit of a coba aernitially plunging on earnings much more to come. every day, visionaries are creating the future. so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country.
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netflix out with its earnings the stock reacting down 1.2% soft on the guidance. >> jon fortt back with us and bring in ed lee, cnbc contributor from "the new york times" covers tech, ross gesh be, netflix sharehold er and dan mys, an analyst at wedbush securities good afternoon ross as a shareholder, are you satisfied with these results or are you nervous about the guidance >> no. i think they're great result they continue to hit it out of the park every quarter, seems
like every quarter, and, you know, they always guide down you know people have to understand this is a corporate strategy every company is doing it now. they learned it from tim cook. guide down and take the hit for five minutes and then you can beat expectations every quarter. we don't pay much attention to that guidance. the real underlying numbers are still very strong for netflix and, you know, we expect that to continue at least for the time being. >> ed, weight your take on the numbers? >> i think it's also a very strong quarter i think the note on the soft churn or the churn around the pricing change is note worthy. i think there are a few factors. hulu lowered its price on the ad driving product around $2 around the time when netflix was talking about raising prices people, consumers, hard core consumers are anticipating all the new services coming in and thinking well maybe i don't renew right now, i'll come back later if i like it and see what
disney does and at&t does. i think the competition will have some effect, but, you know, i think netflix has been thinking about that and pricing that in. >> all of that only affects the u.s. guidance though >> we know the u.s. business has been slowing down for netflix for a few years now. it's really an international company. that's where the growth is coming from and the real valuations are coming from i think that soft guidance tells you the way the market is thinking they have high expectations for the subscriber figures. >> the market reaction tells you something. initially we saw a bigger drop about 4% which in netflix terms is not that big, but now down 1% how do you read the forecast that netflix is giving >> the income is down here if you look the sandbag issue is what the street is focused on but the footsteps of iger and disney and cook and apple. the worry here, does does that guidance represent what we're seeing in streaming as you're seeing more competition and lower price competition from
disney that continues to be as you're starting to see potentially a crack in the armor and it comes down to how significant apple and a disney can be in streaming. >> jon, you've been diving into the release. what's standing out for you? >> i can't help but notice if you take q1 and q2 of last year, add them together, you get around 13.7 million global streaming paid ads and if you add q1 and q2 of this year together you get around 14.6 you wonder if there was a pull forward in q1 affecting q2 seasonally q2 has tended to be weak over the past couple years. that's the commentary i will be curious about on the call. is there any seasonal effect that they're seeing here on top of those churn issues. just sort of natural was there some marketing effect that had some of those net ads added in q1 as opposed to q2 it might be explainable in a way beyond what we're expecting now.
>> the new movies as ell, 52 million households have viewed triple frontier, the ben affleck movie in the first four weeks, the woody harrelson one. our regular film critic ross gerber might want to weigh in on that. >> i do. >> those numbers are pretty good you're always skeptical of the movies. >> see those, i watched both of those movies i don't know if you watched them, but i watched them and they weren't good. >> i actually have watched those. >> did you like them >> still haven't watched -- >> i like the affleck one. i thought the other one was boring. >> the affleck was decent. the other boring they both cost a lot of money. this is my concern with netflix, not that they have any like big problems tomorrow, but it's like how are they really monetizing these movies when disney can take a movie and run it through their system and make a lot of money and drop it on a streamer, netflix's movie business seems very, i guess, naked they spend a lot of money and
don't get anything back. saying 40 million people watched it, but 40 million people didn't like it, there's different issues it's not how many people watch it it's how good it is. so i think what netflix is going to have to look at is, where can we drive over revenue. i drove by the landmark theater in westwood and say highway man was playing there and i was like wow. i don't know why they're doing that maybe for academy award purposes i'm like why are they not putting these in theaters. they're going to need to drive revenue from somewhere else. that's my concern about netflix. >> i think i'm with ross here, the theater play if and when they do it is really a signal to hollywood, like these numbers in terms of the films and what kind of viewership they're getting it's a signal to hollywood talent saying look continue to work with us because people will see your movies. >> wouldn't that hurt their -- people sign up for netflix because we have to see that content. >> i don't think so. >> from the series where all of a sudden a new series becomes this kind of like binge phenomenal and the drives sign
ups. i think that was always the idea. >> there's a dual play here. i think netflix is starting to think about well, we really need to cater to hollywood in the way that they're used to being catered to, buying billboards and doing a short to make sure it has that. >> steven spielberg trash talking them -- >> it's important to get the talent otherwise they will not get the talent to come in. apple is doing that now and amazon it's a signal to hollywood and that's really strategic on their part. >> netflix made a mistake in that they painted themselves against everybody else in hollywood. and now that disney/fox is one entity, and at&t with warner brothers an hbo and then comcast you have three giants that really, really can cut off the flow of good content to netflix if they really push their agents so this is really going to get tougher for netflix and if they don't find other levers to pull i think it's going to get harder and harder for them. >> i don't know if i believe
you're watching all this stuff ross, i think you've been out in the sun. i don't think you're watching all this stuff. >> i was out in the sun. i have to know my products i'm the best at what i do because i know my products and, you know -- >> just joking with you a little bit. >> i need to sleep i need to sleep is what it is. >> data versus catalog netflix for me still as a tech company the core issue is do you believe that with this massive digital platform they have and the data they have about what people like to watch and how long, they're going to be better or at least as good as a company like disney that has all this content where no matter where you are in the world the push, the belief, the message is you have to watch this and understand it. netflix doesn't have that. is the data they have going to be enough? >> final word, wall street seems unconvinced by this. this is all new and in the future of how many streaming players there can be is there room for a netflix and a disney plus and an apple
product? can we have all of them like we had cable channels or winners and losers how are we going to judge that >> yeah. there's clear winners and losers we believe there is room for an apple and disney if you look what the average consumer is spending on streaming, but right now, it's the shadows of disney, it's the shadows of apple especially apple as an ecosystem and distribution platform. this is something where before now, you know, you look at netflix they've been the golden sort of, you know, king here, but you actually have competition coming down. we think there's those opportunities. that's the ultimate fear of the street with apple and disney around the corner. >> we will leave it there. thanks all very much ed ross, dan and our on jon fortt staying with us here up next. >> ross, i'm the best at what i do gerber. that's a good one. >> best at knowing the probabilities. >> i think it was best at what i do. >> big blue big move ibm. we'll be breaking down the
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to fighting in tripoli has increased to nearly 20,000 including more than 2500 in just the last 24 hours. >> the u.n. support mission in libya condems the increased use of hershavy weapons and shelling that has damaged houses, schools and infrastructure the special representative continues his outreach to call for a humanitarian truce >> a funeral service was held at the citadel in charleston, south carolina south carolina for former senator fritz hollings who served nearly 40 years in the senate, many side by side with joe biden who remembered his longtime friend. >> 32 years we sat next to each other every single day when the senate was in session. i learned not only what made fritz tick, not just what he cared about, but i got a glimpse inside the man's soul i think, into his intellect, his love of his family, his love of his
state. >> you are up to date. that's the news update this hour back downtown to you >> sue, as always, thank you very much. still to come, qualcomm surging to its best day since 1999 on news it's settling its royalty dispute with apple we'll speak to an analyst about what it means and the broader chip sector. >> as we head to break check out shares of netflix and ibm. the companies posting their quarterly results and both lower but off the lows of the afterhours session we'll dive into the numbers when "closing bell" returns what's a target date fund? what's a hedge fund? a mutual fund? an index fund? what should i ask my investment professional? how do i know if they're even legit? edgar? who's edgar? how do i read a 10-k? what about fees? what's an etf? 529 plan? 401(k)? how do we plan for retirement? where do i start?
>> we've got a market flash on t mobile and sprint. seema moodied with the details. >> according to dow sources the t mobile/sprint deal has run into pushback from the department of justice's anti-trust staff that could complicate the two company's $26 billion planned merger we've reached out to t mobile and sprint for comment sprint has given cnbc a no comment while t mobile has yet to respond you can see the stock market reaction sprint down 9% in afterhours on this report.
t-mobile down 4.6% verizon also lower on this reported resistance from the doj anti-trust staff involving the mega deal between t mobile and sprint back to you. >> seema, thanks very much for that i mean if these reports are accurate, clearly thewording i there that gives it hope is approved in the current structure, whether there's something that can be done, but the share price direction -- >> it's difficult to know what that might be. the rationale is to kind of take four competitors and make them three, rationalize pricing i think the logic behind it or at least the push to get regulatory approval, t mobile and sprint saying don't just compare us to other wireless carriers, this market is wide open right here, other media companies are in the similar business and therefore it's not just three competitors. >> the market was pricing in this deal, is that what this action shows >> pricing a high probability but by no means considered sealed so i do think there was a little bit of doubt the there
it does show you how much of the value these two companies is really now tied up in them getting together. >> john legere stayed at the trump hotel so many times. >> you know, you never know exactly what it takes. >> let's switch back to ibm after reporting earnings, light to revenue than the street expected let's bring in moshe who joins us by phone. why is the share price declining here >> you know, it's been for ibm top line miss, margin, choppiness and then in line is a better eps, so it's been kind of a [ inaudible ] recurring theme on a quarterly basis the stock has had a pretty decent run since the beginning of the year. shouldn't be that surprising to see the stock trading the way it's trading i think from a big picture perspective, the model continues to be impacted by multiple secular headwinds. we've spoken about so many times. both the software and service
business and it takes time for them to shift all their business to the new, the cloud side of the business, a.i., et cetera. i think at this point it remains the story a work in progress the way we see it. >> what are you looking for on the call >> an update on where we are in terms of the preparations or the integration effort for the anticipated close for the red hat acquisition. what is the company doing in terms of the infrastructure or its cost base that needs to come down further and then maybe talk a bit more about the logic behind the recent revenue restatements, which makes things a bit complicated from a transparency perspective for us >> all right thank you for the quick take moshe on ibm qualcomm soaring after reaching a settlement with apple. a leading analyst weighs in on the deal next. >> at&t selling its stake in
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that's the power of edge-to-edge intelligence. so servicenow put your workflows imm-hm.cloud, huh? your employees must love you. thank you. ah, you could say that. so how are things with you guys? great. thank you. thank you, sir. lunch next week? terrific. say hi to the team. will do. call my office, i will. -sounds good. alrighty. servicenow. works for you. qualcomm stock soaring today after cnbc's david faber first reported apple and qualcomm had agreed to settle its long-running patent dispute. let's bring in ed snyder from charter equity research on the phone covers the clip sector is this a win/win for apple and qualcomm >> short term it's pretty much
more of a win for qualcomm as you can see from the stock's reaction apple it's not really that affected iphone sales weren't down because they didn't use qualcomm's chips and they probably wouldn't be down next year either. it's a completely different animal qualcomm really needed this agreement as you can tell and it's a nice positive upside for them short term. the question is, does this change the outcome for qualcomm two years out or beyond that and that's more nebulous here because in terms of the deal weren't disclosed. from what we read in the press release it's clear that licensing agreement has been recashed which is what apple wanted and apple will pay some or all of the licensing revenue to qualcomm which they desperately needed to meet their n my opinion, fiscal year 19 guidance they gave last january. good news for qualcomm in the short term >> is it better news than the 23% suggests i mean clearly as you already
mentioned we don't know the exact numbers, but there was a lot of threats to this business. it had a lot more priced in before the decision than apple did. >> we don't know until the terms come out, but probably not i think the stock's reaction is a bit over the top and why, because qualcomm's business is made up of two piece, the licensing revenue, almost pure profit, and the chip business. obviously they lost both -- big chunks of both of those when apple quit paying the licensing and dumped them. the new licensing agreement suggests apple got its way with licensing and that's not unusual. in the knee kia fight nokia won, samsung, so qualcomm believe it or not has a history of losing these battles because the licensing agreement is pretty onerous. if you look at the results going back to 2000, their blended royalty rate has dropped from 6% in about 2000 to before apple
fought them. now once the dust settles on this and qualcomm starts reporting their quarters in subsequent periods you will be able to calculate the blended royalty rate and my bet is it's going to be below 2% apple will get the connection they wanted, pure profit dollars qualcomm isn't going to get. will they make enough on the base selling to apple to make up for that and the apple's own iphone unit sales suggest and we've talked about this last summer they're in slow decline so it's going to be a hard argument to make you're going to make enough on chips to make up what you lost on licensing none of that is known yet. we won't know it until the terms of the deal come out or several quarters of reports subsequent to the deal. my gut feeling is you probably are seeing a little too much of a positive reaction for what's probably happened in the settlement >> you sort of played down yesterday the idea that apple could lose out on qualcomm's 5g chips. i mean people are talking about
that as one potential positive here i think you called it had hooy. do you think that's not something investors should get excited about? >> absolutely. as you get into the details, talk to tx-mobile orverizon or at&t, china is planning, and 5g, what's going to be released and what you will actually use in your phones, consumers aren't going to be a toibl tell the difference it's going to be like the 3g launch in 2004 which was much hype and a lot of marketing and going to change the world. what happened? after the getting 3g out there it was a bust. 3g wasn't talked about by 2007 and 2008 we've been a busted upgrade had steven jobs not invented the iphone the iphone the first device that could actually exploit the data available to 3g. you're kind of there today the 5g services people are talking about today you won't even notice on your phone. we're in that period now where
everybody is hyping it and it's the next big thing and everybody wants to talk about the upside for 5g, but the more you get into the details, and i mean get in the test networks with verizon and see what the results are, look at what's going on in the phones it's a very hard argument to make consumers will be able to tell to even have a 5g phone and that is not good news for the sales there are some reports tomorrow and erickson was one of the top three infrastructure providers who build the cell sites, and they have said repeatedly you're not going to see the material revenue from 5g until really until 2022 or so >> we have to go, thank you. ed snyder from charter equity. >> still ahead the streaming wars go up after posting results and what this move couldea mn for its big battle with disney former cnbc host bob wright with former cnbc host bob wright with us next.
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>> netflix shares lower after hours on weaker-than-expected guidance the company noting apple and disfee streaming offering saying in part, quote, we don't anticipate these new entrants will materially affect our growth because the transition from linear to on-demand entertainment is so massive and because of the nature of our content offerings. >> former nbc ceo bob wright good afternoon to you. thanks for joining us. >> thank you, wilfried happy to be here. >> apple, hulu disney? >> i don't think so, but they're clearly far ahead in terms of distribution and in terms of pricing and it's going to be a
lot of effort, but you -- disney is around the world, too i think they can catch up to a large degree i'm looking more at the fact that when they add hulu live, hulu plus, hulu live and when they add espn +, and that is a wo whole different ball game and it's almost like recreating the traditional tv networks 50, 60 years ago by going out and buying different sport events and entertainment events and competing, but there's no question that disney has made a very smart move at this turn, we'll find out they're going to put a lot of money into this and it's an incredible commitment. >> where do you think that leaves apple, bob? >> well, apple is -- apple is perfectly capable of doing a great deal of this, too. there's a lot of technology
here, and even i was noticing on hulu -- on hulu plus live there's a lot of things that they have to do that they haven't done yet, and that's a $44 or $45 or $50 a month service charge if you want no advertising. so these are not inexpensive channels there are 14 or $15, and that jumps all of the way up to $45 or $50 apple has to make choices there. apple's deep pocketed. the technology of making this work and being very attractive to the user. we haven't seen enough of that yet, and that's the head start that netflix has at&t, of course, very active in this space selling its $10% stake in hulu. how difficult a job do they have
integrating time warner and what do you make of the hulu sale and some of those executive departures >> i'm sure they thought about this a long time because they could have stayed in and at 9% that's certainly not going to be a commanding thing, but their programming is going to be very useful and they're going to be a very good negotiator with -- with hulu + or what we're going to call disney with hbo and the library, the warner library and there are a lot of shows there so it will be a factor in this, but they decided to take out billing a for and put it against the debt or whatever and i think that makes pretty good sense comcast has a different story. that's a different -- they -- they will probably stay in and question are they going to ride it out their piece will be worth a lot and somewhere or another they'll have to combine with disney or
separate themselves from disney. >> bob wright, thank you very much, and by the way, bob, happy anniversary to us and to you nbc turning 30 >> it's 30 years today, i guess, and i want to say when we started cnbc everybody asked me two questions. one was who's going to watch it and how are you going to make any money? so we -- we grappled with those issues for some time, and i think we've done pretty well, and i want to thank all of you for making it as good as it is >> well, bob, we thank you i don't think sarah and i are the right people to do that, but certainly all of our thanks to you for doing that. >> you have your hand -- you have your hands on the wheels now, so -- >> we do indeed and we will continue to do our very best a privilege it is to be here our thanks to bob wright and our apologies for the upcoming show. >> "fast money" begins right now. >>